What to Expect from a Contract Loan Underwriting Service

June 24, 2011 by  Filed under: Loans 

A contract loan underwriting service can be a crucial tool for any loan or mortgage professional. It is the job of the underwriter to analyze a loan applicant’s credit worthiness and determine the price of a loan product based on this information. Keeping a full time underwriter on staff is easy for large corporate loan businesses, but if you are managing a one- or two-person office, the expense of recruiting and hiring an experienced underwriter is likely more than you care to spend.

Compete with the Big Names

Small mortgage business can compete with their larger rivals by making use of contract loan underwriting services because these services can provide the quality and thoroughness that you would get from a direct hire, at a fraction of the expense. Because an online underwriting service employs multiple freelance professionals, there is always someone available to get your job done, and get it done correctly. In fact, with the variety of underwriters available, you can count on having not only an experienced underwriter work on your customer’s loan, but a specialized underwriter who understands the particular needs of your client.

What Kind of Services Can You Expect?

A reputable contract loan underwriting service will provide complete services in the areas of title, appraisal, and fraud review; pricing; loan approval; and asset grading. This is done in a multi-step process that looks at a number of different factors. As you set out to choose the right service for you, make sure that their process includes all of these steps.

Collateral and Property Analysis

Your underwriter should complete a careful analysis of the property being financed to ensure it is worth the money that is being paid for it. This analysis should include appraisal reports, past insurance claims on the property, city and state assessments, and property taxes paid on the property.

Credit and Character Analysis

A reputable contract loan underwriting service will also analyze the loan applicant. They will look at his character, which in this case can be defined as his willingness to pay back the loan, as well as his credit worthiness. When looking at his credit, he will look at his current outstanding debt, the timeliness of his past payments, any judgments and settlements against him, and any debt incurred due to divorce. This information will first decide whether or not the customer will be granted the loan, and second, what the interest rate will be.

Income Capacity Analysis

Next, your underwriting service will look at the customer’s income, based on W-2 forms and check stubs. Weighed against outstanding debt, it is the underwriter’s task to discern if the customer is financially able to make the payments on the mortgage.

Title Trace and Legal Ownership

Finally, a reputable contract loan underwriting professional will investigate the legal ownership of the home or business being sold to ensure that it is truly theirs to sell. In addition, they will trace the title, making sure there no outstanding liens on the property that would prevent the loan from closing.

Mortgage Outsourcing helps many companies cut costs. There are many contract loan underwriting service that cater to Mortgage Brokers and Lenders nationwide with a structured process to ensure its success.

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